MS-495: Ethics And Corporate Governance In Banks last 3 yrs paper
June, 2021
Section-A
- Discuss the importance of task related values in a society. Explain with the help of an example how task related values are followed in a society.
- Explain the composition of Board of Directors. How does the Board of Directors perform its role and responsibilities?
- Discuss the three key areas in which the CSR guidelines are divided. Explain the key requirements in each area.
- How is Business Ethics institutionalized in Financial Sector? Explain the steps involved. Discuss the areas which ethics policy should address.
- Who is a whistle blower? Explain the role played by a whistle blower. Give the reasons for emphasis on transparency in governance.
- “Attitudes towards social and antisocial activities play an important role in determining culture of a society.” Discuss.
- Write short notes on any four of the following:
(a) Narayana Murthy Committee, 2003
(b) BASEL Committee Guidelines
(c) Corporate citizenship
(d) Principles of innovation for bottom of pyramid markets
(e) Grameen Bank
Section-B
February, 2021
Section-A
- Discuss various ethical dilemmas faced by banks in India, giving examples. Analyse how to resolve and cope with such ethical dilemmas.
- Briefly discuss the recommendations of Corporate Governance Committees in India which stressed the importance of Audit Committees.
- Describe the nature of CSR guidelines applicable to banks in India. What are the steps to be taken by banks to comply with CSR guidelines?
- Discuss Corporate Social Responsibility in the financial sector with reference to Equator Principles and Financial Inclusion.
- Write short notes on any four of the following:
(a) Ethics and Law
(b) Forms of Business Organisations
(c) Social Audit
(d) Corporate Citizenship
(e) Values and Culture
- Read the following case carefully and answer the questions given at the end:
Clear codes for grey zones?
It’s another Monday morning and after a weekend of celebrating the birthday of one of your friends, you sit in your office and sort out your diary for the week. As the IT manager of a small credit card company you have to prepare for your staff meeting at 10 am when all of your 15 team members will be present. You are planning to discuss the launch of your new promotion scheme, which is due to begin at the end of the week. Fortunately, Paul, who is the main market analyst for the company, was ready to do some extra work at home over the weekend in order to make sure the forecasts were ready for the meeting.
While sipping your first cup of coffee, someone knocks at the door. It is Fred, the hardware manager. He looks a bit embarrassed, and after a little stilted small talk, he tells you that ‘a problem’ has come up. He has just checked in the laptop that Paul, the market analyst, had taken out of the company’s pool and used at home over the weekend in order to finish the forecasts you had asked for. However, when completing the routine check of the laptop, Fred tells you he noticed links to various pornography sites in the history file of the laptop’s internet browser. He tells you that they must have been accessed over the weekend that Paul had the laptop — the access dates refer to the last two days, and as is usual practice, the history file was emptied after the last person had borrowed it.
There is a strict company policy prohibiting employees from making personal use of company hardware, and access to sites containing ‘material of an explicit nature’ is tantamount to gross misconduct and may result in the immediate termination of the employee’s contract. When your hardware manager leaves the office, you take a big breath and slowly finish your coffee.
After a few minutes thinking through the problem, you ask Paul to come into your office. You have a quick chat about his work and tell him that you are really pleased with the forecasts he put together over the weekend. Then, you bring up the problem with the laptop’s history file. When you tell him what has surfaced in the history file, Paul is terribly embarrassed and assures you that he has absolutely no idea how this could have happened. After some thought though, he tells you that he did allow ‘a friend’ to use the laptop a couple of times over the weekend to check his email. Although Paul says that this is the only possible explanation for the mystery files, he does not volunteer any more information on the friend involved. As it goes, this does not actually make you feel much better about the situation: the company’s code of conduct also prohibits use of IT equipment by anyone other than employees.
While driving home that evening, you turn the issue over and over in your head. Yes, there is the corporate code of conduct with regard to web access and personal use of company resources. And in principle you agree on this — after all you were part of the committee that issued the code in the first place. A company like yours has to be able to have clarity on such issues, and there has to be control on what the company’s equipment is used for — no doubt about that. You can’t help thinking that Paul has been pretty stupid in breaking the rules — whether he visited the sites himself or not.
On the other hand, you are also having a few problems with taking this further. Given the amount of embarrassment this has caused Paul already, isn’t it likely to be just a one-off? Doesn’t the company need Paul’s experience and expertise, especially now with the big launch a few days off? Why make problems over the matter of a few websites? Couldn’t you just forget about it for once? As soon as you start thinking this though, you remember that Fred already knows about the problem — and given his good connections throughout the firm you can imagine that the gossip has started circulating already. This looked set to be a tough call.
Questions: (a) What are your main ethical problems in this case?
(b) Set out the possible courses of action open to you and their usefulness.
(c) Assess these alternatives according to the different moral considerations like duties, consequences, rights, justice, etc.
(d) Based on your answer, what are the apparent benefits and limitations of the code of conduct in this example?
Section-B
June, 2020
Section-A
- Describe how values of organisations are developed and reinforced. Discuss the responsibilities that organisations have towards its stakeholders.
- “Good corporate governance in banks is even more important in developing economies like India.” In this context, discuss in detail corporate governance in Indian banking sector with suitable examples.
- Explain the concept of sustainable development and examine _.the corporate responsiveness towards sustainable development norms in India
- What are the benefits of ethics, governance and CSR to companies and how these can be integrated into strategy? Discuss by giving examples.
- Write short notes on any four of the following:
(a) Institutionalising Business Ethics
(b) The Equator Principles
(c) Corporate Citizenship
(d) Consumers’ Rights
(e) Challenges facing sustainable development
- Read the following case’ and answer the questions given at the end:
Corporate governance of professional football clubs: for profit or for glory?
This case analyses the corporate governance issues that arise from the professionalization of modern football clubs in Europe. The case analyses the issues that have led to the transformation of ■ football clubs into modern, multi-million pound business enterprises. It explores alternative organizational forms of football clubs and provides an opportunity to understand the tensions between shareholding and stakeholding.
United not for sale’—proclaimed the• banners at Manchester United’s home stadium, Old Trafford, in response to plans announced by the American millionaire Malcolm Glazer to buy a 75 per cent controlling stake in the club. Ultimately though, the fans were wrong and by May 2005 the club was taken over by Glazer in a move that crystallized the movement from football as a community sport to a multi-million pound international industry much like any other.
The commercialization of football has been a significant trend over the past few decades—and one that has transformed the way the sport is organized, controlled, marketed and financed almost beyond recognition. Long gone are the days of England’s 1966 heroes, most of which played for clubs paying them wages not much different from what a factory worker next door would earn. Players’ wages at the time were largely paid for by gate ticket revenues and football was chiefly a matter of entertaining local fans. Being a suppoiter or member of a football club was a lifelong commitment, part of one’s personal identity and often handed down for generations within a family.
One of the key changes of course came through the involvement and growth of commercial television in the game. This not only led to vast increases in income for the clubs themselves but also to a larger, global audience and fan base for clubs. It is by now commonplace to find fans of Europe’s top clubs, such as Manchester United, ted, Real Madrid, or AC Milan, in Africa, Asia, and Latin America. Parallel to these vast TV contracts, opportunities for generating revenue from merchandising club paraphernalia and advertising contracts came to fill the club’s coffers. In 2003/4 Manchester United, just to name one prominent example, had a turnover of £169m with an annual pre-tax profit £27.9m.
These developments have had significant impacts on how the sport is organized. Most of the clubs now are public limited companies (PLC) such as any other business, and in the 2004/5 season, twelve of the Premier League clubs in England were listed at the stock exchange. For many investors, football has proved to be a lucrative deal: one of the early investors in Manchester United was able to increase his wealth from an initial £840,000 investment to a whopping £93m in 2002 ! Combined with fairytale salaries for players— Chelsea’s most recent acquisition Michael Ballack was signed for £130,000 a week—today’s football landscape is hardly anymore the world of ordinary working men and women’s weekend entertainment.
With these developments towards commercialization, significant challenges await the football `industry’. With roots in what was a simple local institution for fans and communities, many football clubs have struggled to enter the world of professional business. Not only in the UK but all over Europe, spectacular bankruptcies such as the one of Borussia Dortmund in Germany, or corruption scandals, such as the one involving • Juventus that saw the Italian club relegated to Serie B and ,stripped of two titles in 2006, have put serious doubts on whether football clubs have really accomplished a smooth transition into the professional business world.
Another serious issue concerns the role of the fans in the running of football clubs. After all, at the end of the day, clubs depend on their fans for their livelihood, either as spectators, TV audiences, or consumers of merchandise. Yet, since 2002/3, attendances at English Premier League matches have fallen by 10 per cent on average and similar figures apply to TV audiences. Fans appear to feel increasingly aliented by players’ wages, and by the high cost of tickets for games. For example, a season ticket for Arsenal cost between £885 and £1,825 in 2005/6, and the frequent changes in traditional kick off times due to programming demands from TV stations has further fuelled the feeling that football is no longer the fan’s game but simply a business oriented to shareholder revenue. In a recent survey by Michie and Oughton, 60 per cent of the fans who responded said that the dialogue between them and their club was ineffective and nearly half said that their club was not protecting and promoting their interests as fans.
Ironically, it is particularly from the business angle where these developments have caused concerns. After all, a dwindling fan base threatens the very basis of the business success. And even with supporters shifting from attendance in the stadium to TV—who wants to watch a game that takes place in front of empty seats in the stadium?
In recent years, several initiatives have been taken to address fans’ interests more directly, as two examples horn the UK illustrate. A governmentfunded initiative, ‘Supporters Direct’, has initiated the creation of supporters’ rs’ trusts, which basically are a new form of fan organization for the club. As independent representatives of the tans, the trusts have grown in membership, and in 2004/5, 57 per cent of clubs in the UK had a supporters’ trust. However, roughty only a fifth of them were represented on the board of their respective dubs. Another initiative by the clubs themselves has been the ‘Football in the Community’ scheme. This involves the dubs in various social protects generally targetted at embedding the dub into the local community and addressing social exclusion, unemployment, or anti-social behaviour in the immediate vicinity of the clubs.
The incident of the takeover of Manchester United; however, demonstrates the continuing difficulty that fans and other stakeholders have in influencing ‘their clubs. This goes as much for clubs taken over by business tycoons—such as Roman Abramovich at Chelsea or Silvio Berlusconi at AC Milan—or family-owned enterprises such as Juventus or Liverpool. Whilst under family ownership, the club and its sporting ambitions are normally the prime considerations, the participation of fans typically remains limited.
Perhaps the most striking alternative is illustrated by clubs such as Real Madrid and FC Barcelona which are member-owned, democratic, not-forprofit organizations. Here, the club leadership is accountable to the people who watch and pay, and the primary rationale for the club is to play football. Unsurprisingly, unlike their English counterparts these dubs have seen a steady surge in membership (Barcelona: 20 per cent in 2005) and with a membership fee of about £100—and a season ticket for just £ 250—it is no surprise that these clubs are becoming more and more the destination of English football fans hopping on a loiv cost flight to enjoy one of their games in Spain.
Questions: 1. Set out the main stakeholders of football clubs. Describe their ‘stake’ in the company and assess the legitimacy of these interests.
2. What are the key governance issues each of these stakeholder groups might luive?
3. The case describes some solutions and approaches to the issue raised. How do you evaluate the current situation of corporate governance in football clubs?
4. What are your suggestions to improve the governance of professional football dubs beyond what this case explores?
Section-B
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